Yesterday
Not much review needed. I was glued to the computer around mid day and updated everything in comments. It seems the wedge won over the 3 possible patterns we have at the moment.
It was easy to identify with the ascending triangle, base forming and a big rally just as I had posted. To top it off, let me just quote it here.
"My perfect trade plan of course would be to re-attempt yesterdays top and hit the 856. Here is where it will get interesting, it is very possible that we keep on pushing further up the range to get back to the 864 and possibly hit the first 871."
Glad we got this nailed right on the money. High of the day 870.35. Additionally let me quote the following comment I made yesterday as well.
"here is the thing I am afraid off, that number 871-878 may never come. I think institutions will start selling off before then, the same way my 640 never came and institutions started buying before then.
Bears are so freaked out now that no one is shorting anymore, everyone wants to wait for that perfect setup."
I am not sure if we marked the top here, of course technically we are seeing strong signs of this being the top, but so did we at previous tops. It seems every time I feel a top is in, we keep on rallying. We have reached the magic 20% range before wedge closure. Here is how the wedge can play out, scenario a is one last push up breaking the upper trend line just to reverse strong, and second is the breakout on the lower end.
If feel we had our push yesterday, so much negative fundamental news yet the market rallied on low volume, keep in mind that we had a 25 million shares SPY sell transactions right at the close. Thats a lot of money !!!!
We will need to wait and let the market tell us.
Today
Going to keep it short. We have our position now (whoever went short too yesterday) so now the first priority today is protecting this position. Earnings from GE and C today. They won't be very good. GE does not have the same luxuries the other financials have in terms of changing their reports to their liking (ok sorry). So far our earnings have been, amazing for WFC, great for GS, decent for JPM - I hope you are seeing the pattern.
I will not have as much time today but I will try my best to post whatever I am seeing during the day.
Good luck to all of us.
GE Reports 1Q Profit of $0.26 a Share Vs. $0.21 Est.; Citi Reports Loss of $0.18 Vs. $0.34 Loss Est. (Stories Developing)
ReplyDeleteLooks like we will be pushing some more. Have to admit a bit surprised at this one. Especially Citi reporting a loss eventhough they had the new accounting changes working for them.
keep in mind option expiration today. So we may see a sideways day now that earnings here are "average".
ReplyDeleteHowever get ready for GM news at 10:15AM today. May cripple the markets, but could also be a big push up if they come up with a great strategy.
thanks, in the current climate is there such a thing as a top resistance point if we continue to push up? i know you mentioned the Dow 8200 yesterday.
ReplyDeletewe have a few scenarios today. Option expiration friday normally means sideways. However we have earnings to deal with and the market is liking what GE and C announced. That means we can have one last chance at the 871-878 range here.
ReplyDeleteEither rally right off the open, to hit this point early morning, or remain rather sideways. Keep in mind we have GM news as well.
Regarding 8200 on the DOW, yes this is a very important point but could easily be taken out if we have frenzy buying here. Very possible, too many variations today and lack of "order" - which is to be expected.
I am staying with the SDS position, add more if we get back into mid 870 range here. At the same time going in a bit stronger on the long side if we get crazy buying. The goal is to even out both positions today to walk away without any losses even if we have a major up day.
thats great! thank you. this market is enough to make my head spin! when bad news isnt quite bad and when good news isnt all that good!
ReplyDeletethinking of adding to SDS position but dont want to be caught out if the market turns so keeping a close eye on it. thanks again for your insightful commentary, much appreciated!
Great quote here again that I am sure many have heard. "the market can stay irrational longer than you can stay solvent"
ReplyDeleteSo to prevent this craziness good money and risk management is needed. We all feel that this is just a bear market rally here, are we too early to the game? Possible; will you ever catch a perfect top or bottom? Nope
However, if you stick to your beliefs, even if the trend goes against you short term, you can still make money.
Of course the easiest is to wait for final confirmation. I mean why are we shorting into a rally here? think about it. Why risk those 20 points when you can just wait until we break the lower end of the wedge to slowly scale in.
For my SDS I have a long term target, 3 months most likely. From 860 to 480, that's almost 400 points. Why worry about 20-30 points on the top when that only represents a small portion of the total gains to be had? - well, quite honestly, because we can, while this is a bad reason it is important to manage those entries correctly if you go against the trend and use leading indicators (instead of trailing indicators). Just different risk profiles and money management strategies.
If you can have a proper strategy that can protect be protected, even if a short position experiences a draw down of 10+%, well then you good to go.
The other thing I like about trying to get a better top is the ability to manage stops correctly. At the current time the mental stop in my mind is 880. If you were to scale in at lets say 820, you have to assume a much larger risk margin in case the market reattempts the upper range.
If we break 880 of course I may change my short strategy due to the 912 as the next level. Probably add stronger hedges, take some off. But we have some room to go still.
Thanks for all the insight :-)
ReplyDeletei thought i saw an ascending triangle formation but i was wrong...got to the top of the day but no further.
ReplyDeleteChris,
ReplyDeleteDo you expect to see a sell off at close?
I see ascending triangle, broke down and went up. I think we have seen the HOD
ReplyDeletegot in SRS 26.44, FAZ 8.65, SDS 65
ReplyDeletelet us see what happens next week
Nice entries!
ReplyDeleteindeed, better then my average =)
ReplyDeletethough in the big picture of things, once we sell at 90+ a few bucks won't matter much, but still nice to know you got in as close to the top as you can.
If you would have told me yesterday that we would retest the 871 and not even flinch and just cut through it like better I would have called you crazy.
Interesting times we are in at the moment, we will be talking about this for quite a while to come.
* cut through it like butter (not better)
ReplyDeleteI agree. It is not worth chasing exact top or bottom. I got burnt and sold my FAS too early when I got it at 2.41. since these do not have expiration date, one could hold and play intermediate term. Upside is limited, fundamentals are scary and manipulation can go on for only so long. How can a wrong multi trillion dollar bet be resolved so quickly. that is my thinking.
ReplyDelete